Bitwise Warns Stalled Clarity Act Could Push Crypto Into 'Show Me' Phase

Crypto markets are at a crossroads as momentum behind the Clarity Act falters, warns asset manager Bitwise. In a Monday blog post, Bitwise CIO Matt Hougan said the stalled bill — designed to lock a pro-crypto regulatory stance into law — could determine whether the market rides a continued bull run or slides into a tougher, evidence-driven “show me” phase. The Senate Agriculture Committee pushed a scheduled crypto market-structure markup hearing from today to Thursday after a U.S. winter storm delayed proceedings. Hougan warned that without legislative certainty, the industry remains exposed to shifts in future administrations. Market confidence in the bill has cooled: Polymarket traders placed its odds of passage near 80% in early January, but those probabilities have fallen to roughly 50% after critics, including Coinbase (COIN) CEO Brian Armstrong, said the current draft contained provisions that could hurt consumers and stifle competition — prompting Coinbase to withdraw support. Bitwise lays out two possible paths for crypto returns depending on the bill’s fate: - If a workable Clarity Act passes, the firm expects a sharp market rally as investors price in a broader, legally backed expansion of blockchain finance. - If the legislation stalls, the market would likely enter a “wait and see” period, with gains capped by regulatory uncertainty and reliant on demonstrable, real-world adoption. Hougan argues that, absent law, crypto must follow the playbook of disruptive firms like Uber and Airbnb — becoming so integrated into everyday life that policymakers have little choice but to accommodate them. He suggests the industry has roughly three years to make stablecoins and tokenized assets indispensable to the U.S. economy; success could force favorable regulation, while failure could leave the sector vulnerable. Wall Street broker Benchmark echoed a tempered view: a failed bill would slow but not stop crypto’s maturation. In that scenario, U.S. investors could shift toward bitcoin-focused exposure, companies with strong balance sheets, and cash-generating infrastructure, while riskier, regulation-sensitive areas such as exchanges, DeFi and altcoins lag. Bitwise remains cautiously optimistic the administration will act on its pro-crypto promises but advises investors to prepare for a slower ascent if a legislative foundation isn’t secured. Read more AI-generated news on: undefined/news